Hawaii Six O - Gary Wagner
Gold futures hold above $1,900 as spot gold trades just below at $1,899.30
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As of 4:30 PM Eastern Standard Time, the new most active Comex futures contract for (August 2021) is currently fixed at $1902.10 after factoring in today’s decline of $3.30. However, spot or Forex gold is currently trading under $1900 per ounce and fixed at $1899.40, a net decline of just over $7 on the day. Gold futures traded to a high of $1919.20 and a low of $1894.50 before settling just above that key psychological level of $1900 per ounce.
Although dollar weakness contributed fractional tailwinds, it was not enough for futures or spot gold to close positive on the day. Currently, the dollar index is fixed at 89.91, down -0.088 points on the day, which is a net decline of about 1/10 of a percent.
The recent surge in gold pricing is a reflection of multiple factors, including dollar weakness, inflationary fears, and extremely accommodative interest rates set by the Federal Reserve. The fact that gold futures were able to trade and effectively close above $1900 is significant. It was also reported that inflows into GLD, the electronically traded gold fund showed a tremendous uptick.
Citing Bloomberg data, Carsten Fritsch, an analyst at Commerzbank, said that “purchases by exchange-traded funds totaled 49 tons in May.” Furthermore, he said, “They were the first monthly inflows since January and the biggest since September 2020. In view of the high inflation expected in the coming months and the significantly negative real interest rates as a result, demand among ETF investors should remain high, thus lending additional tailwind to gold.”
Gold futures have traded above their 200-day moving average for the 11th consecutive trading day, and even with today’s slight price decline remains tentatively above $1900. Our technical studies indicate that there is minor resistance at $1941.70, which corresponds to the 23.6% Fibonacci retracement. The study also indicates that there is the potential for major resistance at $1962, which was a top of gold pricing that occurred on January 4 of this year. Lastly, the golden cross that we identified between the 50- and 100-day exponential moving averages continues to widen. Currently, the differential between those two moving averages is a spread of approximately nine dollars, with the 50-day exponential moving average fixed at $1820.10 and the 100-day exponential moving average fixed at $1811.40.
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Wishing you, as always, good trading and good health,